Sovereign risk accounting for recent sell down of GPR??
Will this add much to costs, if it is not done a competitive rates? I assume the big boys will have a lot more to lose than GPR, so they would be pressuring Gov't to be reasonable.
From AFR today:
PNG throws fresh curveballat gold miners
Gold giant Newcrest Mining says thePapua New Guinea government would need to show that gold refining in the nationcan be secure and commercially competitive before forcing mining companies torefine their gold in PNG.
The commentsfrom the biggest gold miner on the ASX come after PNG Prime Minister James Marape unleashed a fresh bout of sovereign risk by declaring that all gold mined in PNG would need to be refined in the country by 2025.
The deadlinewas announced as the PNG government signed an agreement with a private firmdescribed by PNG media as “Refinery Holdings” for the construction of arefinery and mint that would be partly owned by the PNG government.
Newcrest’sbiggest mine by volume is PNG’s Lihir operation, which produces gold in an intermediateform called “dore” and ships it to the Perth Mint for further refining intopure gold.
Askedwhether it supported the new PNG policy, a spokesman for Newcrest said thecompany looked forward to further consultation on the details.
“Newcrest isopen to having a portion of its production being refined in PNG provided therefinery is capable of delivering internationally acceptable and marketableproducts including ‘London-good’ delivery bars of gold,” he said.
The spokesman said Newcrest would alsorequire “adequate security for our gold at all stages of production, storageand delivery and commercially competitive terms with the international market”.
The push foronshore refining is the latest example of Mr Marape’s increasingly nationalistapproach to PNG’s natural resources, which has previously seen him push oilgiants Exxon and Oil Search for a better deal on their liquefied natural gas interests in the developing nation.
Mr Marapehas framed his nationalist approach under the banner of “Take Back PNG”, butironically the private company that will deliver the refinery appears to havestrong Australian links.
While theexact corporate structure of Refinery Holdings is unclear, the Aspermontpublication PNG Report published photographs ofrepresentatives of Refinery Holdings and named those representatives as JamesScobie and Michael Boyd.
TwoMelbourne-based men of the same names are directors of an Australian registeredcompany called “Gold Partners PNG”, which is the biggest shareholder in aSingapore company called Refinery Holdings Pte Ltd.
Mr Scobieand Mr Boyd are also directors of the Singaporean company, which has 16shareholders, 13 of which are based in Melbourne.
In additionto the potential impact on Lihir, Newcrest wants to build a greenfield gold andcopper mine in the PNG highlands called Wafi-Golpu, which is currently thesubject of negotiations between Newcrest and Mr Marape’s government.
The surprisepush for domestic refining shapes as a curve-ball for negotiations overWafi-Golpu, which is not expected to be producing gold before 2026 at theearliest.
Wafi-Golpuwas Newcrest’s prime growth asset when Mr Biswas became chief executive in2014, but the project has become a lower priority for Newcrest on the back ofthe PNG government’s reluctance to award a mining lease and the emergence ofother growth options in Western Australia, Canada and Ecuador.
In a sign of Wafi-Golpu’sfading relevance, a nine-year growth plan published by Newcrest last month did not include any volumes from Wafi-Golpu.
Newcrestchief Sandeep Biswas said in October that Wafi-Golpu was a fabulous asset, butthe ongoing uncertainty over the company’s ability to develop it had promptedhim to be conservative and exclude it from the growth plan.
“If suddenlywe can pull a good agreement [for Wafi-Golpu] out of the bag, that is going toadd a lot of value to the company and the country,” he said.
The push fordomestic refining of gold is designed to create more jobs in PNG and stoke moreflows of foreign currencies like the US dollar, which is used to price gold.
The push toensure PNG gets more exposure to the full value chain of its natural resourcesmirrors Indonesia’s approach over the past decade; Indonesia has required minesbe majority owned byIndonesian companies and forced miners to conduct more processing of natural resources on Indonesian soil.
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